The former owners of the Rutland Herald have filed for bankruptcy after repeated effort's to sell the newspaper's old office building and associated properties.

Herald Association, which sold the newspaper in 2016 but retained ownership of the company's real estate, filed for federal Chapter 7 bankruptcy protection earlier this month.

"It's kind of been apparent this is the last best option for us to help move the building forward," said Rob Mitchell, whose family owns the company. "We just kind of ran out of options. ... It's not the way we wanted things to turn out, but hopefully it gets things moving."

The company sold the building at auction, but buyer Joe Giancola backed out, claiming to not have been aware of potential (and well-publicized) contamination issues at the parking pit, which was the site of the Berwick Hotel before that building was destroyed in a fire in the early 1970s. DEW Construction announced plans to build a large hotel on the site, contingent upon receipt of a federal tax credit. That deal fell apart earlier this year, with DEW citing difficulties with financing amidst the financial crisis triggered by the COVID-19 pandemic.

Mitchell said a court-appointed trustee will collect and liquidate the assets and decide how much each creditor gets.

"They argue over who's got precedent," Mitchell said. "It'll probably be ongoing through the end of the year."

Assuming, he said, the building sells in that time.

"Maybe it would end up in the city's hands and they could do something with it," Mitchell said. "I know in Vermont, developers aren't exactly jumping at stuff."

"The Berwick site is a very critical piece of our downtown landscape - certainly in an underutilized state, possibly falling into a blighted state," said Brennan Duffy, executive director of the Rutland Redevelopent Authority.

Duffy said there is a strong desire to see the site repurposed and that there seems to be a broad consensus that a hotel would be the most appropriate use. However, Duffy said he has had no conversations with prospective developers since the DEW deal fell through.

"We assume there's not going to be a lot of speculative investment any time soon, but we do want to be ready for anything once things open up again," he said.

Duffy said the city will have a seat at the table in the process as one of the company's creditors - liabilities include almost $100,000 in city taxes and water and sewer fees - and will want to influence the outcome as best it can.

Board of Aldermen President Matt Whitcomb said that there was at least a chance of the city taking over the property and having the RRA then market it.

"I think the goal is, we have certain things we would like to see there and with control of the property, we could assure we find the right suitor," he said.

However, Whitcomb said he would need to know details before getting behind any such plan and that taking on the building's other liabilities could be a very tough sell, especially with the city already looking to buy the College of St. Joseph gym.

"I think the price has to be absolutely right," he said. "It would have to be one of those perfect deals where we get it at a very low price."

The filings list the company as having $733,478 in property and $923,257 in liabilities, including $874,257 in secured claims and $49,000 in unsecured, "nonpriority" claims. The assets include the properties at the corner of West and Wales Street, a checking account containing $118, deposits worth $22,600 and a property on Quarterline Road in Clarendon worth $83,300.

Mitchell said the property - which came with a never-exercised option on 200 acres of adjacent farmland - has been with the company since before his family bought the Herald and remained unused.

"The Herald Association bought that property in case the company wanted to diversify into radio," he said. "I think it was 1945 or 1946. ... We never went into radio. Just kind of inertia kept it there."

In addition to $98,457 owed the city, the filing lists secured liabilities as $800 in property taxes to the town of Clarendon and $775,000 outstanding from a Small Business Administration disaster loan the company took out in 2012 after its printing press was destroyed in a flood. The unsecured debts include $38,000 to Rutland Fuel Company and $11,000 to law firm Ryan, Smith & Carbine.

Elizabeth Glynn, a real estate lawyer being brought in on efforts to sell the property by trustee Ray Obuchowski, works for one the listed creditors. In a disclosure/waiver of conflict filed with the court, Glynn described the Herald's debt to Ryan, Smith & Carbine as "a very old legal bill."

"That receivable has been written off by my firm for many years," Glynn wrote.

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City Reporter

Gordon has been a reporter for the Rutland Herald for nearly 20 years. A Castleton State College graduate, he's covered beats from the West county to the city, cops and courts and everything in between.

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